Who Can Deduct Moving Expenses?

You can deduct your allowable moving expenses if your move
is closely related to the start of work. You also must meet
the distance test and the time test. These two tests are discussed
later.

Retirees or survivors. You may be able to deduct the
expenses of moving to the United States or its possessions
even if the move is not related to a new job. You must have
worked outside the United States or be a survivor of someone
who did. See Retirees or Survivors Who Move to the United
States, later.

Related to Start of Work

Your move must be closely related, both in time and in place,
to the start of work at your new job location.

Closely related in time. You can generally consider
moving expenses incurred within one year from the date you
first reported to work at the new location as closely related
in time to the start of work. It is not necessary that you
arrange to work before moving to a new location, as long as
you actually do go to work.

If you do not move within one year, you ordinarily cannot
deduct the expenses unless you can show that circumstances
existed that prevented the move within that time.

Example. Your family moved more than a year
after you started work at a new location. You delayed the
move for 18 months to allow your child to complete high school.
You can deduct your allowable moving expenses.

Closely related in place. You can generally consider
your move closely related in place to the start of work if
the distance from your new home to the new job location is
not more than the distance from your former home to the new
job location. A move that does not meet this requirement may
qualify if you can show that:

A condition of employment requires you to live at your
new home, or

You will spend less time or money commuting from your
new home to your new job.

Distance Test

Your move will meet the distance test if your new main job
location is at least 50 miles farther from your
former home than your old main job location was from your
former home. For example, if your old main job was 3 miles
from your former home, your new main job must be at least
53 miles from that former home.

The distance between a job location and your home is the
shortest of the more commonly traveled routes between them.
The distance test considers only the location of your former
home. It does not take into account the location of your new
home. See Figure A.

Example. You moved to a new home less than
50 miles from your former home because you changed main job
locations. Your old main job was 3 miles from your former
home. Your new main job is 60 miles from that home. Because
your new main job is 57 miles farther from your former home
than the distance from your former home to your old main job,
you meet the 50-mile distance test.

First job or return to full-time work. If you go to
work full time for the first time, your place of work must
be at least 50 miles from your former home to meet the distance
test. If you go back to full-time work after a substantial
period of part-time work or unemployment, your place of work
also must be at least 50 miles from your former home.

Exception for Armed Forces. If you are in the
Armed Forces and you moved because of a permanent change of
station, you do not have to meet the distance test. See Members
of the Armed Forces, later.

Main job location. Your main job location is usually
the place where you spend most of your working time. A new
job location is a new place where you will work permanently
or indefinitely rather than temporarily. If there is no one
place where you spend most of your working time, your main
job location is the place where your work is centered. For
example, your main job location is where you report for work
or are otherwise required to "base" your work.

Union members. If you work for several employers
on a short-term basis and you get work under a union hall
system (such as a construction or building trades worker),
your main job location is the union hall.

More than one job. If you have more than one
job at any time, your main job location depends on the facts
in each case. The more important factors to be considered
are:

The total time you spend at each place,

The amount of work you do at each place, and

The money you earn from each place.

Time Test

To deduct your moving expenses, you also must meet one of
the following time tests. See Table 1.

Time test for employees. If you are an employee, you
must work full time for at least 39 weeks during the
first 12 months after you arrive in the general area
of your new job location. For this time test, count only your
full-time work as an employee; do not count any work you do
as a self-employed person. You do not have to work for the
same employer for the 39 weeks. You do not have to work 39
weeks in a row. However, you must work full time within the
same general commuting area. Full-time employment depends
on what is usual for your type of work in your area.

Temporary absence from work. You are considered
to be a full-time employee during any week you are temporarily
absent from work because of illness, strikes, lockouts, layoffs,
natural disasters, or similar causes. You are also considered
a full-time employee during any week you are absent from work
for leave or vacation provided for in your work contract or
agreement.

Seasonal work. If your work is seasonal, you
are considered to be working full time during the off season
only if your work contract or agreement covers an off-season
period and that period is less than 6 months. For example,
a school teacher on a 12-month contract who teaches on a full-time
basis for more than 6 months is considered a full-time employee
for 12 months.

Time test for self-employed persons. If you are self-employed,
you must work full time for at least 39 weeks during
the first 12 months AND for a total of at least 78
weeks during the first 24 months after you arrive
in your new job location. For this time test, count any full-time
work you do as an employee or as a self-employed person. You
do not have to work for the same employer or be self-employed
in the same trade or business for the 78 weeks.

Self-employment. You are self-employed if you
work as the sole owner of an unincorporated business or as
a partner in a partnership carrying on a business. You are
not considered self-employed if you are semiretired, are a
part-time student, or work only a few hours each week.

Full-time work. Whether you work full time
during any week depends on what is usual for your type of
work in your area. For example, you are a self-employed dentist
and maintain office hours 4 days a week. You are considered
to perform services full time if maintaining office hours
4 days a week is usual for other self-employed dentists in
the area.

Temporary absence from work. You are considered
to be self-employed on a full-time basis during any week you
are temporarily absent from work because of illness, strikes,
natural disasters, or similar causes.

Seasonal trade or business. If your trade or
business is seasonal, the off-season weeks when no work is
required or available may be counted as weeks of performing
services full time. The off season must be less than 6 months
and you must work full time before and after the off season.

For example, you own and operate a motel at a beach resort.
You are considered self-employed on a full-time basis during
the weeks of the off season if the motel is closed for less
than 6 months and you work as a full-time operator of the
motel before and after the off season.

Joint return. If you are married and file a
joint return and both you and your spouse work full time,
either of you can satisfy the full-time work test. However,
you cannot combine the weeks your spouse worked with the weeks
you worked to satisfy that test.

Time test not yet met. You can deduct your moving
expenses on your 1999 tax return even if you have not yet
met the time test by the date your 1999 return is due. You
can do this if you expect to meet the 39-week test in 2000,
or the 78-week test in 2000 or 2001. If you deduct moving
expenses but do not meet the time test by 2000 or 2001, you
must either:

Report your moving expense deduction as other income on
your Form 1040 for the year you cannot meet the test, or

Amend your 1999 return.

Use Form 1040X, Amended U.S. Individual Income Tax Return,
to amend your return.

If you do not deduct your moving expenses on your 1999 return,
and you later meet the time test, you can file an amended
return for 1999 to take the deduction.

Example. You arrive in the general area of
your new job on September 15, 1999. You deduct your moving
expenses on your 1999 return, the year of the move, even though
you have not yet met the time test by the date your return
is due. If you do not meet the 39-week test by September 15,
2000, you must either:

Report as income on your 2000 return the amount you deducted
as moving expenses on your 1999 return, or

Amend your 1999 return.

Exceptions to the time test. You do not have to meet
the time test if one of the following applies.

You are in the Armed Forces and you moved because of a
permanent change of station. See Members of the Armed
Forces, later.

You moved to the United States because you retired. See
Retirees or Survivors Who Move to the United States,
later.

You are the survivor of a person whose main job location
at the time of death was outside the United States. See
Retirees or Survivors Who Move to the United States,
later.

Your job at the new location ends because of death or
disability.

You are transferred for your employer's benefit or laid
off for a reason other than willful misconduct. For this
exception, you must have obtained full-time employment,
and you must have expected to meet the test at the time
you started the job.

Members of the Armed Forces

If you are a member of the Armed Forces on active duty and
you move because of a permanent change of station, you do
not have to meet the distance and time tests, discussed
earlier. You can deduct your unreimbursed allowable moving
expenses.

A permanent change of station includes:

A move from your home to the first post of active duty,

A move from one permanent post of duty to another, and

A move from your last post of duty to your home or to
a nearer point in the United States. The move must occur
within one year of ending your active duty or within the
period allowed under the Joint Travel Regulations.

Spouse and dependents. If a member of the Armed Forces
deserts, is imprisoned, or dies, a permanent change of station
for the spouse or dependent includes a move to:

The place of enlistment,

The member's, spouse's, or dependent's home of record,
or

A nearer point in the United States.

If the military moves you and your spouse and dependents
to or from separate locations, the moves are treated as a
single move to your new main job location.

Services or reimbursements provided by government.
Do not include in income the value of moving and storage services
provided by the government because of a permanent change of
station. In general, if the total reimbursements or allowances
you receive from the government because of the move are more
than your actual moving expenses, the government should include
the excess in your wages on Form W-2. However, the excess
portion of a dislocation allowance, a temporary lodging allowance,
a temporary lodging expense, or a move-in housing allowance
is not included in income.

If your reimbursements or allowances are less than your actual
moving expenses, do not include the reimbursements or allowances
in income. You can deduct the expenses that exceed your reimbursements.
See Deductible Moving Expenses, later.

How to complete Form 3903 for members of the Armed
Forces. Take the following steps.

Complete lines 1 and 2, using your actual expenses. Do
not include any expenses for moving services provided
by the government. Also do not include any expenses which
were reimbursed by an allowance excluded from income.

Enter on line 4 the total reimbursements and allowances
you received from the government for the expenses claimed
on lines 1 and 2. Do not include the value of moving
services provided by the government. Also do not include
any part of a dislocation allowance, a temporary lodging
allowance, a temporary lodging expense, or a move-in housing
allowance.

Complete line 5. If line 3 is more than line 4, subtract
line 4 from line 3 and enter the result on line 5 and on
Form 1040, line 26. This is your moving expense deduction.
If line 3 is equal to or less than line 4, enter zero on
line 5 (you do not have a moving expense deduction). Subtract
line 3 from line 4 and, if the result is more than zero,
enter it on Form 1040, line 7.

If the military moves you and your spouse and dependents to
or from different locations, treat these moves as a single move.

Do not deduct any expenses for moving services provided by
the government.

Retirees or Survivors Who Move to the United States

You can deduct your allowable moving expenses if you move
to the United States or to a possession of the United States.
You do not have to meet the time test, discussed
earlier, but you must meet the requirements discussed below.

Retirees. You can deduct moving expenses for a move
to a new home in the United States when you permanently retire.
However, both your former main job location and your former
home must have been outside the United States.

Permanently retired. You are considered permanently
retired when you cease gainful full-time employment or self-employment.
If at the time you retire, you intend your retirement to be
permanent, you will be considered retired though you later
return to work. Your intention to retire permanently will
be determined by:

Your age and health,

The customary retirement age for people who do similar
work,

Whether you receive retirement payments from a pension
or retirement fund, and

The length of time before you return to full-time work.

Survivors. You can deduct moving expenses for a move
to a home in the United States if you are the spouse or the
dependent of a person whose main job location at the time
of death was outside the United States. The move must begin
within 6 months after the decedent's death. It must be from
the decedent's former home outside the United States. That
home must also have been your home.

When a move begins. A move begins when one of the
following events occurs.

You contract for your household goods and personal effects
to be moved to your home in the United States, but only
if the move is completed within a reasonable time.

Your household goods and personal effects are packed and
on the way to your home in the United States.

You leave your former home to travel to your new home
in the United States.